A worker on sick leave can carry forward untaken leave into a new holiday year under the Working Time Regulations even if the worker was capable of taking annual leave. But this isn’t an unlimited right to carry over holiday into subsequent years indefinitely – the maximum period for which holiday could be carried over was 18 months from the end of the leave year in which the annual leave arose.

The Working Time Regulations do not allow an employer to pay a token sum on termination in lieu of untaken statutory leave (in this case a contractual term providing for a token payment of £1). Any payment in lieu made must be equivalent to the pay the worker would have received had he or she taken the leave during employment.

Adding some clarity to a troublesome area of the law, the Court of Appeal has confirmed that a worker who is on long-term sick leave does not need to request to take statutory leave under the Working Time Regulations in a particular leave year in order to either carry it over until they return to work, or be paid for it on termination.

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